Summary of this article
Nifty and Sensex gained nearly 2 per cent during the week
Crude oil, Iran tensions and US elections remain key risks
Investors will track PMI data, US jobs numbers and FII flows
Equity markets ended the week with gains of nearly 2 per cent, supported by renewed foreign investor buying, easing bond yields and encouraging corporate earnings. The Nifty 50 rose 2 per cent during the week, while the Sensex gained 1.83 per cent.
On Friday, October 30, the Nifty closed 116.35 points, or 0.51 per cent, higher at 23,053.10. The Sensex gained 308.49 points, or 0.42 per cent, to end at 74,459.53.
Broader markets outperformed the benchmarks. The Nifty Midcap 100 rose 2.69 per cent during the week, while the Nifty Smallcap 100 advanced 4 per cent.
Lower crude oil prices and easing bond yields supported the rally earlier in the week. However, renewed tensions in West Asia pushed oil prices higher towards the end of the week, prompting investors to book profits in mid- and small-cap stocks.
Stock Market Next Week: Top Cues To Watch
As markets enter November, investors will track crude oil prices, economic data from India and the US, and developments around Iran and the US midterm elections. Here are seven key stock market cues to watch next week.
1. Crude Oil Prices And OPEC+ Meeting
Brent crude ended the week near $117 a barrel. Investors will watch the OPEC+ meeting on November 1 for signals on production and global supply.
Higher crude oil prices are a concern for India, which imports most of its oil requirements. A sustained rise can increase the import bill, widen the current account deficit and put pressure on the rupee. It can also hurt the margins of oil marketing companies, aviation firms and paint manufacturers. Any indication of higher supplies from OPEC+ could ease these concerns.
2. India Manufacturing And Services PMI
India's final manufacturing PMI for October will be released on Monday, November 2, followed by services and composite PMI data on Wednesday, November 4.
The October flash readings showed manufacturing PMI easing to 54.9 from 55.1 in September. Services PMI rose to 56.2 from 55.2, while composite PMI increased to 56.7 from 55.9.
All three readings remained above 50, indicating expansion.
Stronger final readings could support sentiment towards banking, consumption and industrial stocks by signalling resilient domestic business activity. A slowdown, particularly in services, could raise concerns about demand and economic growth.
3. US Manufacturing And Services PMI
The US ISM Manufacturing PMI is scheduled for November 2 at 8:30 PM IST. The ISM Services PMI will be released on November 4 at the same time.
These readings will offer clues about the health of the US economy and the Federal Reserve's interest rate outlook.
Strong business activity, accompanied by persistent price pressures, could keep US interest rates higher for longer. This may support the dollar and US bond yields, making Indian equities less attractive to foreign investors. Weaker readings, on the other hand, could improve expectations of rate cuts.
4. US Midterm Elections And Iran Tensions
The US midterm elections on November 3 will determine the composition of Congress and influence President Donald Trump's ability to push through his policy agenda.
However, developments around Iran could have a more immediate impact on financial markets. The New York Times reported last week that the US and Israel had drawn up plans for possible strikes against Iran after the elections.
Any military escalation could push crude oil prices higher, increase volatility and trigger selling in emerging markets, including India.
5. US ADP Non-Farm Employment Data
The US ADP employment report for October is scheduled for November 4 at 6:45 PM IST.
The report tracks changes in private-sector employment and offers an early indication of labour market conditions ahead of the official US jobs report.
Stronger hiring could reduce expectations of Federal Reserve rate cuts, supporting the dollar and US bond yields. Weaker employment growth could have the opposite effect and support emerging-market equities.
6. US Non-Farm Payrolls And Unemployment Rate
The US October employment report will be released on November 6, at 7 PM IST.
Investors will track non-farm payroll additions, the unemployment rate and wage growth to assess the health of the US labour market. The numbers will also influence expectations around the Federal Reserve's interest rate decisions.
Strong job growth and rising wages could keep rate-cut expectations in check, while weaker data may improve the outlook for monetary easing. Any sharp deterioration in employment, however, could raise concerns about a slowdown in the US economy.
7. FII Buying And Bond Yields
Foreign institutional investor (FII) flows and bond yields will remain important indicators for Indian equities. According to National Securities Depository Ltd (NSDL) data, FIIs were net sellers of Indian equities worth Rs 34,843 crore in October. However, buying worth Rs 13,213.41 crore in the final week helped pare their monthly outflows, which would otherwise have been considerably higher.
Renewed foreign buying has supported the latest market recovery. A continuation of these inflows could provide support to large-cap stocks, particularly banking and financial services companies.
Investors will also track domestic and US Treasury yields. The benchmark US 10-year Treasury yield fell below 5 per cent last week. A further decline could make Indian equities more attractive to foreign investors and support FII inflows. Lower domestic bond yields could also reduce borrowing costs for companies and support stock valuations.
